The last few months have seen a number of regulatory developments in Canadian capital markets that may specifically affect companies in the oil and gas industry. Below, we've compiled a list of key legal developments since July 1, 2014 that may be of particular interest, along with corresponding links to our securities blog.
Capital Markets
- TSXV approves the completion of three oil and gas team-led
recapitalizations of shells by written consent of a majority of
shareholders (five in total since December 2013).
- TSX circuit-breaker rules are expanded to all actively traded stocks (more than 500 trades a day and average $1.2M in value per day).
Continuous Disclosure
- Canadian regulators
adopt rules for the disclosure of gender diversity and
other board composition issues by non-venture issuers. These
requirements apply in the 2015 disclosure cycle.
- Canadian regulators announce the outcome of the joint
continuous disclosure review of more than two hundred issuers
— key issues included revenue recognition in financial
statements and non-GAAP measures in MD&A.
- TSX publishes Electronic Communications Disclosure
Guidelines and provides guidanceon using social media — confirms
the importance of factual statements that avoid selection
disclosure.
- Amendments to the rules governing auditor
oversight provide for disclosure of CPAB remedial orders, certain
changes to rules involving foreign audit firms and other procedural
matters.
- The ASC decision in Haggerty confirms that an "impression, speculation or abstract possibility" does not constitute material information.
Activism & Litigation
- Canadian regulators confirm that they will not require reporting
of ownership of 5% of shares — the reporting threshold will
stay at 10%.
- Activist attempts in Partners REIT to secure proxy
votes in contested board election by making tender offer for 10% of
shares and demanding proxies on all tendered shares.
- SCC confirms that the settlement of regulatory proceedings does
not bar class action suits for the same conduct.
- Delaware Court of Chancery offers support to board discretion to adopt a rights plan in the face of activism in Third Point.
M&A
- Canadian regulators propose adopting rules that allow targets the
option to require bidders to leave bids open for 120 days and
imposing minimum 50% tender before take-up — rulemaking to
follow.
- BCSC's reasons in Hud Bay confirm that the right of a shareholder to
tender bid remains paramount in M&A regulation —
supporting the decision to leave a rights plan in place for 155
days.
- TSX approves rules that allow buyers to increase
headroom under security compensation plans for employees of the
target without shareholder approval.
- Delaware Court of Chancery offers cautionson the management of conflicts in M&A transactions involving directors and financial advisors in Rural Metro.
Regulatory
- OSC can now examine all records of a market participant as
part of an enforcement action (not just records which must be
retained under law).
- Canada, Ontario, BC, Saskatchewan, New Brunswick and PEI continue to advance a co-ordinated Canadian securities regulatory authority, which could be operating next year.
Notable Transactions
- Kufpec's purchase of 30% of Chevron's Duvernay assets
for US$1.5 billion
- Encana's purchase of Athlon Energy for US$5.9 billion
- Pembina's purchase of the Vantage pipeline and midstream
assets from Riverstone for US$650 million
- Enbridge Income Fund's purchase of assets from Enbridge for
$1.8 billion
- Apollo's formation of Jupiter Resources and completion of
the purchase of Encana's Bighorn assets for US$1.9
billion
- Ember Resources' purchase of assets from Encana for $605 million
Key Stikeman Elliott Publications
- Oil and Gas Trends in Q1 and Q2 2014(July 3,
Securities Blog)
- Review of 2014 H1 Oil & Gas Public M&A
Deal Terms (August 27, Energy Blog)
- Review of Automatic Trading Plan
Considerations (August 6, Securities Blog)
- Discussion of Partners REIT issues (August 28 and September 19, Securities Blog )
- Review of the Delaware decision in Rural Metro (August 22, Securities Blog)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.